Monday, 15 October 2012

Satyajit Das: Best in Show

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By Satyajit Das, a former banker and author of Extreme Money and Traders Guns & MoneyAutumn
is the time for awards. The EU has received the Nobel Peace Prize! The
approximately US$1.2 million should help alleviate the parlous finanial
position of the Euro-Zone. But it is also the season for banking awards.
Financial magazines and newspapers assign bouquets to the best Finance
Ministers, banks and bankers to coincide with the annual World Bank
shindig and the approaching year end. Here is an insight into the
process.

In the mock-umentary Best in Show, Christopher Guest
mercilessly portrays the world of dog shows, following five dogs and
their owners in the competition for top honours at the Mayflower Kennel
Club Show. Bankers have their equivalent – banking awards. There are
many similarities – an overt self-absorption, ferocious competitive
bitchiness and feigned good sportsmanship. Both are completely
meaningless and very funny.

Just as dog shows bring out the
essence of humans, awards highlight the absurdities of banking and
bankers. Any industry, which celebrates transactions with “tombstones”
perhaps depicting the post deal status of some clients, has issues.

The
idea behind industry awards is that clients and peers vote on who is
the best. In reality, the major driver is not recognition by clients and
peers. The value of the award is in promoting the bank’s services. A
dealer voted best “something in something somewhere” uses it prominently
to solicit clients. “See our clients and peers have voted us ‘best in
show’”.

It complements the ostentatious self-promotion in “pitch
books”. There are lies, there are statistics, and then there are league
tables that inevitably show the bank in the top one or two of the
relevant categories of financial services. Young analysts learn to manipulate league table positions to ensure the
required status. Bank XYZ is the top rated underwriter of debt for
resources companies resident in Congo in the month of December 2011
between the hours of 400 and 430 p.m.

Publishers and media
companies also love awards. It is a rich source of sponsorship and
advertising revenue, a phenomenon shared with any activity associated
with celebrity and sizeable egos.

You have award receptions and
dinners – for which you can sell sponsorships. Trade shows for suppliers
– mainly information providers, IT companies and consultants to the
industry. There are sponsors of individual awards. Suppliers of
conspicuous consumption for bankers – prestige carmakers, expensive
tchotchkes (watches, jewellery, personal electronics), designer clothes –
can be sprung for contributions.

Then there is the magazine award
issue. You can sell ads for the winners. You can sell ads to those who
are associated with the winners congratulating them on their
achievements and congratulating themselves on being associated with
them. Winners can be persuaded to insert sponsored statements of their
peerless capabilities.

The trick is to create enough categories so
that everyone can be a winner. Losers might take offence and hold
deep-seated resentments. Taking a lead from the construction of league
tables, it is not difficult to create enough award categories to ensure
everybody wins something.

There are even individual awards – lifetime achievements, the Hall of Fame etc. The possibilities are endless.
Polling
is supposedly anonymous and independent. Like democracy, it is not
clear who votes or even who is eligible to vote. A significant portion
of the registered voters may be deceased. Some banks get customers to
vote early and vote often. The polling process is obscure and vague.
There are “hanging chads” and rigged counts. There are no independent UN
observers or electoral commissions.

You ring the magazine arranging the awards. You explain that you had heard scuttlebutt that you or your bank would be crowned “Best Something in Something”. If this was correct,
then you indicate the possibility of the purchase of a platinum sponsor
of the award event (cost say $100,000) and a full-page ad in the
magazine ($20,000). In a strange coincidence, you or your bank win the
award.

Of course, there are standards. As Dr. Theodore W. Millbank
III observes in Best in Show: “And really, I think what we’re talking
about is standards, basically; very, very specific, rigid, you could
say, but in this world where would we be without them, I think. And
notice where we are.”

The real reason for awards is revealing.
Financial products are largely undifferentiated and bankers are
generally anonymous – after all it’s all money. There is no try before
you buy, no test drive before you commit. Having entered into a
transaction or appointed an underwriter or adviser, you are at risk of
discovering ex post that you made the wrong choice. To avoid this risk
of error, customers need a basis for discriminating between financial
institutions. Awards standings provide one basis for selection – after
all no one ever got fired for selecting IBM!

Maslow’s hierarchy
identifies 5 layers of human need: basic (food, water, shelter), safety,
love or belonging, esteem and self-actualisation. The equivalent for
bankers is different: money, more money, even more money, more please,
self-actualisation (synonymous in the modern world with celebrity)!
Bankers don’t lack self-esteem. They have never had to worry where their
next meal is coming from. Money can buy everything else. Awards meet a
deep psychological need for validation.

No one really understands
what they do. How only elite bankers know how to get things done. As one
banker told ethnographer Karen Ho: “We’ve made everyone smarter. We
know much more … we’re the grease that makes things turn more
efficiently.” The receipt of an award from a glamorous B grade nymphet
or sporting hunk while trussed up in dinner finery is recognition that
they are truly Masters of the Universe.
As the character Hamilton Swan puts it in Best in Show: “Don’t look at the fat ass losers or freaks, look at me!